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How an Elevator Company More Than 160 Years Old is Using Disruptive Technology to Reach the Cloud

When you think about elevators, you may become instantly bored. Up, down… what else is to it?

Well, Otis Elevators, a unit of United Technologies (NYSE: UTX), is recognizing that there is a lot more to it when you tap into the disruptive technology known as the Internet of Things, or IoT. Over the last few days, Otis and United Technologies have inked agreements with AT&T (NYSE: T) and Microsoft (NASDAQ: MSFT) to expand the use of IoT solutions, including cloud-computing. The goal is to make elevators smarter.

Observers note that cloud-based applications are key to IoT, which has been named as a disruptive technology. As a 160 year-old company, Otis stands to benefit greatly from expanding its relationships with AT&T and Microsoft because it is poising them to take advantages of innovations that could improve their top and bottom lines. The IoT solutions provided by these companies can help Otis shed old business practices that made it difficult for it to operate as efficiently as possible.


 · Putting disruptive technology to use


In addition to building elevators, escalators and moving walkway equipment, Otis also services its products. By collaborating with AT&T and Microsoft, Otis clients will be able to use the gathered information to improve the performance of their Otis-installed elevators, among other products.

An estimated 30,000 employees who service Otis elevators worldwide will benefit from the collaborations.

Microsoft chief executive officer Satya Nadella described the elevator itself as a digital product in this day and age. During the announcement of the tech company’s collaboration with the elevator maker, he said,

“Every elevator is going to be connected. Every elevator is going to have predictive and analytic capability.

By working with Microsoft, Otis can accelerate efforts it already has underway to expand the use of internal productivity apps. Also, the company wants to transform its elevator service by applying tools that help it better connect to its customers and improve service.

That’s where Microsoft’s technology comes into play. Otis will expand its use of Microsoft’s cloud service, which is called Microsoft Azure IoT Suite. Otis will also expand the use of Microsoft’s Cortana Intelligence Suite to use big data to monitor and maintain the conditions of its elevators. Lastly, Otis will expand its use of Microsoft’s customer relationship management system, called Microsoft Dynamics CRM. In a statement, Otis noted that its deployment of Microsoft Dynamics CRM is significant because it will allow it to “offer a comprehensive cloud-based solution to enhance the customer experience and accelerate business productivity.”

Working with Microsoft, Otis will accelerate efforts underway across the organization to expand the use of internal productivity apps being developed by field teams around the world. Furthermore, the use of Microsoft’s CRM system will allow it to link operations in the more than 200 countries and territories where Otis offers its products and services, according to the statement.

In working with AT&T, Otis will tap the telecom’s IoT portfolio, also, to gather data and perform big data analysis through the cloud.

According to a statement from AT&T, Otis companies around the world will be able to use AT&T IoT technology to aggregate data from cell networks and connect to a new enhanced cloud environment.  AT&T’s Global SIM card and IoT Services, such as Control Center and M2X will allow Otis to access real-time equipment performance data. In addition, AT&T will serve as the primary mobility provider for Otis field operations, noted the statement.

Philippe Delpech, the president of Otis, said that its new generation of elevators will be defined by new digital tools that better connect its people with its customers – and its customers with their equipment.


 · Moving forward


Delpech added that by leveraging AT&T’s IoT technology, it will be able to harness data generated by the nearly two million elevators currently under Otis service contract transporting more than two billion people per day. Otis has about 30,000 mechanics who spend roughly 60 million hours a year servicing elevator and escalator equipment.

With those kinds of high numbers for its products, workers and time, it is quite brilliant of Otis and United Technologies to seek the IoT solutions of both AT&T and Microsoft. IoT has been called the next Industrial Revolution, as observers believe the technology will change the way businesses maximize their abilities to connect digitally.

According to a report produced by Bi Intelligence, 34 billion devices will be connected to the Internet by 2020. That is up from 10 billion in 2015. 

Nearly $6 trillion will be spent on IoT solutions over the next five years. Microsoft‘s vice president of global accounts said United Technologies is at the forefront of an “essential shift, using technology to make buildings and transportation function more efficiently and move the world forward.”

Considering the growth of IoT solutions and their reputations of accelerating the development of digital solutions for smart building equipment, it is a very good move on the part of Otis and United Technologies to tap AT&T and Microsoft to improve energy efficiency and help its employees become more productive.

United Technologies reports earnings for Q1 2016 on Wednesday. Analysts estimate that it will report earnings per share of $1.39 on $13.18 billion in revenue.

This week United Technologies announced an increase in its quarterly dividend, which will rise to $.66 from $.64.

The dividend hike, and the collaborations are attractive, especially if you are in search of a solid long-term investment. United Technologies is poising itself to take advantage of the growing IoT market. This shows that this company that has been along for about 160 years is not allowing innovation to pass it by.

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